Blockchain and Smart Homes

Blockchain is a decentralized ledger technology. When applied to the energy sector, it will enable people to trade energy on peer to peer trading platform, which will enable a fundamental shift in the distribution of energy supply and usage.

Inside our homes, the application of blockchain will accelerate the introduction of Internet of Things (IoT) connected smart devices. Inter-connectivity has been a roadblock in the smart technology category for a decade, and blockchain could be the solution to this. By creating a more inclusive ecosystem it will be possible to exchanged data freely between devices.

This is a major step in moving from individual smart devices to fully connected, intelligent homes. Finally, we’re seeing the walls that inhibit access to useful data being shattered. The decentralization of data means better working smarter homes that are more secure. It’s an important catalyst that will accelerate the adoption of smart devices and ultimately help our homes become smarter and perhaps most importantly, more energy efficient.

Once fully connected homes are more pervasive, blockchain will play a role in helping people manage their energy usage smarter. We can’t force people to care about every kWh. But many people will opt-in for demand response, when incentives are aligned. Because of this, we’ll soon see more energy companies explore modern demand response options. Blockchain will help energy management to be routinely delivered as a service to customers, on an automated basis.

Whether it’s changing a thermostat set point or dimming lights, energy companies will be able to optimize for the needs of the grid through smart technology data from devices found in people’s homes. Because this will require a massive amount of small changes on a real-time basis, changes that have financial consequence for several parties, blockchain will make the previously impossible, possible.

Blockchain and Energy Sector

However, with users paying each other directly, many of the traditional market roles could be called into question, including distribution system operators, retailers, suppliers, metering point operators, balancing groups and more. Blockchain could also be used for electricity tracking with at least two purposes: rewards for generating renewable energy, and renewable energy certificates or carbon credits. For those who want to invest in renewables but lack the funds, blockchain technology could enable collective investments and fractional ownership, ensuring fair and transparent sharing of revenues.

Blockchains ability to allow peer-to-peer energy transactions could significantly disrupt the energy sector, particularly by encouraging decentralization. The growing use of small renewable energy installations, such as rooftop solar panels, can create stress on electricity grids that were designed with large, centralized power plants in mind. By allowing peer-to-peer energy trading and incentivizing local consumption at the time of production, blockchain could stabilize the grid, aiding this decentralization.

As always, the future is uncertain, but one thing is for sure; the way we store and exchange information is changing, and it is unlikely that the energy market will look the same in decades to come. If harnessed for good, blockchain could play a key role in speeding up the transition to renewable energy and the redistribution of surplus energy generated by small scale renewables.